Better late than never. That is what the former lenders of Banca Columna (Columna Bank) must have thought upon learning the National Bank of Romania (NBR) had officially declared it bankrupt, six years after Columna defaulted.
This bank is connected to the name of the former Romanian Intelligence Service (SRI) director Virgil Magureanu. Coincidentally or not, the managers of the bank were former Communist Youth Union (UTC) leaders. Columna popped up overnight some time in '94-'95, with a "postal office box in Switzerland" - Manel Finanz as its main shareholder. The bank experienced a powerful growth for about a year. Many state-owned enterprises, the State Ownership Fund (SOF) and Casa de Economii si Consemnatiuni (Romanian Savings Bank - CEC) on top, opened accounts with Columna back then.
Now that the bankruptcy has been declared, the individuals - about 170, are offered the possibility to recover the 1.4bn ROL they lost. Corporate bodies will have to wait a while though, and there is nothing they can do except for hoping the liquidator of the bank, PricewaterhouseCoopers Management Consultants will do its job so that they could get their money back some time soon.
Even though Columna has been under conservation for more than six years now, NBR's Board of Directors decided to withdraw its operating licence in June 2000. The decision was based on the fact that the lawsuit between the bank and its main creditors, i.e. CEC and the SOF had been in courts for too long.
After a great deal of procrastination and endless trials, the Bucharest Court of Law on March 18, 2003 finally found in favour of starting bankruptcy as petitioned by NBR.
"This has been a lengthy process, which has taken much too long for no good reason and was detrimental to creditors. All in all, better late than never," Nicolae Cinteza, head of the banking supervision department within the NBR told Ziarul Financiar.
Under the circumstances, the Banking System Deposits Guarantee Fund will begin disbursing compensations for the guaranteed deposits made by individuals on May 26. The only thing people have to do is file an application.
"The compensations for the 170 people, which are worth 1.4bn ROL, will be disbursed over the next three years, as the law says. The maximum amount paid as damage is modified every six months and was set to 118.4 million ROL/depositor for the first half this year. The money will be paid at the Fund's headquarters," Marian Predescu, economic manager of the Guarantee Fund explained.
He says people can get their money back if they file an application with the Fund, which must necessarily detail the personal identification data of the account holder and how they choose to have the money paid.
The bankruptcy of Columna could not possibly be delayed for much longer, considering the bank was degrading year by year.
Moreover, the NBR officials say the World Bank and the International Monetary Fund have been constantly asking what has become of the bank lately.
In addition, none of Columna's financial indicators meets NBR's requirements any longer and no prudentiality indicator has been observed since a very long time ago.
Columna's indicators were "frozen" several years back and kept at a level which is not compliant with any prudentiality system: the share capital is now worth 100bn ROL, the equity is negative, i.e. minus 452bn ROL, and the total assets amount to a little above 300bn ROL.
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